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by bombcar 1481 days ago
If you're only holding crypto assets to back your stablecoin, doesn't it eventually work out to 1 BTC = 1 BTC? (Or ETH in this case, I guess).
1 comments

Not if it's a basket of different crypto. You could peg it to the overall market cap of crypto. It would then by definition be stable in reference to itself, each token would always represent a fixed % of the pool. It still wouldn't be stable in relation to other non-crypto markets, but it's instability would be relative to crypto as a whole rather than any particular coin.

But this is only helpful if you don't need to have your money going back & forth between crypto & traditional investments or currency. It wouldn't be stable relative to fiat currencies. Relative to outside systems it would be more stable than riskier coins but probably less stable than something like BTC. Individual coins are still highly correlated to the crypto market as a whole, so any single coin's stability (or lack thereof) could still move the value of a stable coin like this significantly in relation to outside financial systems.